Becton, Dickinson and (BDX)
Q1 2013 Earnings Call
February 05, 2013 8:00 am ET
Vincent A. Forlenza - Chairman, Chief Executive Officer and President
Suketu Upadhyay - Acting Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Controller
Tom Polen - President
William A. Kozy - Chief Operating Officer and Executive Vice President
David H. Roman - Goldman Sachs Group Inc., Research Division
Kristen M. Stewart - Deutsche Bank AG, Research Division
David R. Lewis - Morgan Stanley, Research Division
Jon Davis Wood - Jefferies & Company, Inc., Research Division
Amit Bhalla - Citigroup Inc, Research Division
Kimberly Weeks Gailun - JP Morgan Chase & Co, Research Division
Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division
Brian Weinstein - William Blair & Company L.L.C., Research Division
Jonathan P. Groberg - Macquarie Research
Lawrence S. Keusch - Raymond James & Associates, Inc., Research Division
Jonathan J. Palmer - Credit Agricole Securities (USA) Inc., Research Division
William R. Quirk - Piper Jaffray Companies, Research Division
Eric Criscuolo - Mizuho Securities USA Inc., Research Division
Matthew Taylor - Barclays Capital, Research Division
Derik De Bruin - BofA Merrill Lynch, Research Division
Richard Newitter - Leerink Swann LLC, Research Division
Previous Statements by BDX
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Thank you, Jackie. Good morning, everyone. Thank you for joining us to [ph] first fiscal quarter results. As we reference in our press release, we are presenting a set of slides to accompany our remarks on this call. The presentation is posted on the Investor Relations page of our website at bd.com.
During today's call, we will make forward-looking statements, and it is possible that actual results could differ from our expectations. Factors that could cause such differences appear in our first fiscal quarter press release and in the MD&A sections of our recent SEC filing.
We will also discuss some non-GAAP financial measures with respect to our performance. A reconciliation to GAAP measures can be found in our press release and its related financial schedules and in the slides. A copy of the release, including the financial schedules, is posted on the bd.com website.
Leading the call this morning is Vince Forlenza, Chairman, Chief Executive Officer and President. Also joining us are Suky Upadhyay, Senior Vice President, Corporate Controller and acting Chief Financial Officer; Bill Kozy, Executive Vice President and Chief Operating Officer; and Tom Polen, President of Diagnostic Systems.
It is now my pleasure to turn the call over to Vince.
Vincent A. Forlenza
Thank you, Monique, and good morning, everyone. As we stated in our press release, we're off to a good start this year, and we're pleased with our performance in the first fiscal quarter. Overall, revenues and EPS were solid. At the end of December, we completed the acquisition of Safety Syringes, Inc. or SSI. SSI specializes in the development of anti-needlestick devices for prefilled syringes and will be reported in our Pharmaceutical Systems business unit within BD Medical's -- BD's Medical segment.
Growth in the first quarter was driven by our Medical and Diagnostic segments. Revenue growth was partially aided by an early flu season and favorable comparisons to the prior year period. In our Bioscience segment, we saw solid growth, which was driven by improved instrument placements in the U.S., as well as favorable comparisons to last year.
We also saw strong continued growth in international Safety sales and emerging markets. As we've been discussing with you for some time now, we have spent the past 2 years making significant strategic investments in our business in the backdrop of a challenging macroeconomic environment. When we provided our full year guidance in November, we expected to see solid revenue growth, margin expansion and underlying double-digit earnings growth, excluding the medical device tax. Our underlying business performance for the first quarter demonstrates that our strategy is delivering results and gives us the confidence to raise the bottom end of both our revenue and EPS guidance ranges. Suky will provide more details on our fiscal year 2013 outlook later in his remarks.
On Slide 5, we've outlined our first quarter revenue and EPS results, which I will speak to on a currency-neutral basis. The total company revenues were solid, increasing by 5.2%. Fully diluted EPS came in at $1.35, growing at 15.8% over the prior year.
Now I'd like to turn things over to Suky for a more detailed discussion of our first quarter financial performance.
Thank you, Vince, and good morning, everyone. I'd like to begin by discussing the key financial highlights for the first quarter. As Vince just stated, our results were ahead of our expectations, with Medical and Diagnostics driving solid growth for the company. This quarter, we also saw an improvement in our Biosciences segment. After normalizing for the flu, favorable comparisons and acquisitions, our first quarter underlying revenue grew at the upper end of our previous guidance range.
As a reminder, when we talk about our acquisitions this year, we are referring to KIESTRA, Sirigen and SSI. Accuri and Carmel Pharma have annualized and will now be included in our base going forward.
In the quarter, we saw strong gross margin expansion of 200 basis points, which led to improved operating margin expansion of 220 basis points. We are on track to meet our goal of about 50 basis points of underlying operating margin expansion for the fiscal year.
Additionally, during the quarter, we completed about $300 million of our $500 million share repurchase plan for FY 2013. As Vince also mentioned, our first quarter results gives us the confidence to raise the bottom end of our currency-neutral revenue and EPS guidance ranges. Given a stronger euro, we're also raising our reported revenue and EPS outlook while also tightening the range. I'll provide more details around our outlook later in the call.